ALEXANDRIA—Oral arguments have been set for March 17-20 in Navy Federal Credit Union's appeal of a lower-court decision that determined the credit union did not have “diversity jurisdiction” to file a federal lawsuit.
The credit union is challenging the U.S. District Court for the Eastern District of Virginia's ruling that Navy Federal is not a citizen of Virginia – where it is headquartered – or any other state based on statutory language that says federal credit unions are corporations. “This is contrary to how courts have long looked at this issue,” NAFCU said.
In order to sue in federal court, certain criteria must be met: the plaintiff and defendant either have to have a federal case or controversy, or be citizens of different states. If this criteria is not met, then the lawsuit must be filed in state court, NAFCU explained in its analysis.
Supreme Court to Review
Separately, the U.S. Supreme Court has granted a petition to review a lawsuit challenging the constitutionality of the government-backed debt collection exception of the Telephone Consumer Protection Act (TCPA).
Under the exception, calls intended to collect a debt owed to or guaranteed by the U.S. are exempt from the TCPA, NAFCU explained.
The Ninth Circuit Court of Appeals in June ruled that the exception violates the First Amendment. The court did not rule the entire statute unconstitutional, but found that the debt collection provision is severable from the rest of the statute. NAFCU said it has repeatedly asked for clarity from the Federal Communications Commission (FCC) on TCPA exemptions, and it remains unclear whether the government-backed debt exemption includes Fannie Mae and Freddie Mac loans.
NAFCU President and CEO Dan Berger, in a recent letter following up on a meeting with FCC Commissioner Michael O' Rielly, reiterated NAFCU's call for guidance and relief under the TCPA and shared concerns from member credit unions.